Reports » Malaysia

Malaysia stock market and companies daily report (October 22, 2012)

Contributed by Shares Investment

Petronas Dagangan Acquries 2 Philippines Companies
Petronas Dagangan (PDB) has completed the acquisition of Petronas Energy Philippines Incorporated (PEPI) and Duta Incorporated (Duta) in accordance with the terms of the share sale and purchase agreements dated June 1, 2012. According to PDB in a statement on Saturday, 21 October, the completion of the acquisition for the two Philippines companies will be transacted via its newly-incorporated, wholly-owned investment holding company, PDB (Netherlands) B.V. The regional expansion plan was part of PDB’s market growth strategy and to geographically diversify revenue and earnings base. The company is confident of growing its presence in the region by leveraging on Petronas’ strong brand in these countries and utilising its shared supply, added the CEO. The two companies are part of the six downstream companies in South-East Asia which PDB acquired earlier in June 2012.
Significance: Its business prospects in the region offered PDB growth opportunities where liquefied petroleum gas demand in the Philippines had shown a compounded annual growth rate of 1.1 percent from 2005 to 2011.

UMW Optimistic About FY13 Performance
UMW Holdings is targeting to achieve a pre-tax profit and revenue of RM1.7 billion and RM15 billion respectively, by end of next year. The encouraging business growth on all divisions provided a prospective outlook for future earnings. However the company is still cautiously optimistic due to economic slowdowns in the West and countries that UMW has operations in. For the first half ended June 30 2012, UMW group recorded revenue of RM7.8 billion against RM6.3 billion from a year ago. Furthermore, to strengthen its oil and gas division’s status in the industry, the group had acquired a ultra-premium jack-up drilling rig called Naga 4 worth RM684 million which is slated in February next year. During the first half, UMW’s automotive division recorded higher revenue of 18.6 per cent year-on-year, unfazed by the new lending guideline. Notwithstanding steep competitions, Perodua cars ensembled by UMW managed to increase its sales by 16.9 percent year-on-year in the first half of 2012, according to JF Apex research.
Significance: The addition of Naga 4 is expected to assist UMW to clinch more upstream jobs and compete with bigger players such as Sapura Kencana and other foreign oil majors for exploration works. Moving forward, the group has made continuous engagements with the Government and banks to reach some compromise level of working relationship in the processing of loans under the new lending guidelines.

TM Denies P1 Acquisition Bid
Packet One Networks (P1), the mobile broadband operating unit of Green Packet, has come into focus again, this time being linked to Telekom Malaysia (TM). The country’s incumbent telecommunication company had strongly denied news report that it was seeking approval to bid for P1. Last week, speculative reports had indicated there were a number of bidders for P1, with a bank already appointed to search for keen buyers. However, TM’s denial of interest had led to speculation whether the deal to sell P1 will go through or will Green Packet fall back on to its original listing plans to aid cash flow. So far, a banker has already been hired to look into the option of listing to raise capital. Green Packet shares drew intense interest last week amidst all the speculation, surging to a multi-month high of 65 sen on Wednesday, 17 October, nevertheless, the stock fell back to a closing of 58.5 sen on Friday 22 October due to the lack of clarity.
Significance: Previously, Green Packet had reportedly spent more than RM1 billion in investments for its P1’s 4G deployment plans and activities, thus producing a setback where its cash flow are now of concern.